U.S. Business Organizations and Foreign Policy: The Case of the Capital Surge Towards the European Common Market (1958-1974)

Janick Marina Schaufelbuehl

This paper analyses the influence of major U.S. business associations on Washington’s policies toward the development of the European Common Market. It thus contributes to the renewed historiography on business-government relations, by focusing on the under-researched question of U.S. business associations’ role in foreign policy formation.

Following the establishment of the European Economic Community (E.E.C.) in 1958, U.S. foreign direct investment (F.D.I.) in Western Europe soared. Although these capital flows were part of the general globalization of U.S. multinational enterprises after 1950, direct investments in Western Europe rose more than double the rate of F.D.I. in other parts of the world, with the E.E.C. countries attracting the bulk of these investments.

In the 1960s, faced with a growing balance of payments deficit, the Kennedy and Johnson administrations aimed at curbing this F.D.I. in Western Europe in an effort to lessen the deficit and strengthen the dollar without renouncing the government’s soaring aid and military expenditures. These efforts conflicted with the shorter-term interests of U.S. business leaders. The paper shows which U.S. business organizations took the lead in defending the profitable capital flows to Western Europe in the face of the government’s attempts to control them, and analyzes the different strategies they adopted and channels through which they acted. It thus provides a fresh analysis, based on multi-archival research, of business-government interactions in the context of the U.S. government’s Cold War economic policies and the most profound transformation taking place in Western Europe during the post-war era: the establishment of the Common Market.